The unexpected Brexit bonus
Brexit has saved lives and will boost economic output by billions
This article is taken from the June 2021 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issue for just £10.
Almost eighteen months have passed since Brexit. Are we any closer to answering the vexed question, “Will we be better or worse off outside the European Union?”? In the referendum debate all sorts of estimates were bandied around. Famously or notoriously, the overwhelming majority of official documents argued that the UK would be much poorer.
A particularly contentious calculation came in April 2016 from the Treasury, with the publication of the Cmnd. 9250 White Paper. It said that, after 15 years, the UK could be worse off by as much as 9.5 percent of gross domestic product (or £4,300 per household) if Brexit happened without a special trade deal with the European Union.
The White Paper’s explanation was that Brexit would result in a loss of “openness” to Europe and the world, and a consequent fall in the ratio of trade to national output. The fall would lose gains from specialization, undermine productivity and reduce output per head.
In practice a trade deal has been reached with the EU, while our new-found ability to conduct trade negotiations outside the EU will almost certainly result in significant net liberalisation of our international commerce. Over time Brexit may therefore enable a rise in the ratio of trade to GDP.
Our government is no longer constrained by a foreign bureaucracy
Anyhow, Cmnd. 9250 has been forgotten. Instead the focus of every European government this year — the first in which the UK has been fully outside the EU’s single market — has not been on exports and imports, but on the virus and vaccinations.
On this front Brexit has given an unexpected plus to the UK. Our government is no longer subordinate to the EU Council of Ministers or constrained by a foreign bureaucracy. It has had the freedom to buy large quantities of the Covid-19 vaccines and to inoculate much of the population, and to do so several months ahead of our European neighbours. The advantage, which has been widely noticed, is undoubtedly large. But, so far, no precise numbers about its size have been prepared. In the spirit of stimulating a more rigorous discussion, please allow me to proffer some calculations.
The first benefit is that the UK’s earlier vaccination drive has saved thousands of lives. That statement may sound melodramatic, but the general point cannot be questioned. Figures for Covid-19 deaths in April for the large European countries provide a basis for discussion.
According to the European Centre for Disease Prevention and Control, an EU agency, these deaths were 11,665 in Italy, 8,889 in France and 6,508 in Germany. By comparison, the Worldometer website says that in the UK they were only 811 (the ECDPC is an EU agency to which the UK no longer supplies data).
On the face of it, the greater speed of the UK’s vaccination programme is saving at least 5,000 lives a month and perhaps as many as 10,000. Suppose that the UK will be four months ahead of its European neighbours in reaching herd immunity, which — to repeat — is possible only because of Brexit. Then Brexit has saved between 20,000 and 40,000 lives relative to what would have happened if the UK had remained an EU member state.
Calculations of the value of life may upset the squeamish, but societies cannot avoid the issue because medical resources are finite and insurers need a basis for compensating accident victims. In my column (What price coronavirus?) in the May 2020 issue of The Critic, I suggested using £30,000 as the value of one life year, on the basis that the NHS will not spend more than £30,000 a year on drugs per patient, even if those drugs would keep patients alive.
Assume that those who die from Covid-19 would otherwise have lived another decade. With 20,000-40,000 lives saved because of the UK’s quicker vaccination programme, the value of the benefit “to the nation” comes out as between £6 billion and £12 billion (this is ballpark and very rough. For example, I have not applied discount rates to the later years of the assumedly extended lives).
The greater speed of the UK’s vaccination programme is saving at least 5,000 lives a month
The second key benefit is that people can return to work sooner than would have been possible if we had remained an EU member state. Let us take it that Covid-19 restrictions are leading to an 8 per cent loss of output while they continue.
If we again assume that our post- Brexit freedom and earlier immunity allows us to resume full production four months sooner than the EU, the benefit comes to between 2½ and 2¾ per cent of one year’s national output, which is rather more than £50 billion (the UK’s gross domestic product in 2019 was £2,172.5 billion).
The referendum debate was full of fibs, damned fibs and statistics, and some of the fibs came from the Leavers. Is this column full of fibs too? Well, in reaching a figure of £60 billion or so, I have been open about my assumptions. I am not pretending my answers are perfect.
All the same, the relative speed of the UK’s vaccination programme has occurred only because of our post-Brexit freedom to govern ourselves. The truth — the obvious and indisputable truth — is that Brexit has saved lives and increased output.
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